Corbertt Pharmaceuticals manufacturers an over-the-counter allergy medication. The company sells both large commercial containers of 1,000 capsules to health care facilities and travel packs of 20 capsules to shops in airports, train stations, and hotels. The following information has been developed to determine if an activity-based costing system would be beneficial:

Requirement 1.

Corbertt's

original single plantwide overhead allocation rate costing system allocated indirect costs to products at

$81.50

per machine hour. Compute the total indirect costs allocated to the commercial containers and to the travel packs under the original system. Then compute the indirect cost per unit for each product. Round to two decimal places.

Select the formula, and then enter the amounts to compute the indirect cost per unit for each product. (Abbreviation used: mfg. = manufacturing. Round dollar amounts to two decimal places.)

Corbertt Pharmaceuticals manufacturers an over-the-counter allergy medication. The company sells both large commercial containers of 1,000 capsules to health care facilities and travel packs of 20 capsules to shops in airports, train stations, and hotels. The following information has been developed to determine if an activity-based costing system would be beneficial: (Click the icon to view the information.) Read the requirements. Requirement 1. Corbertt's original single plantwide overhead allocation rate costing system allocated indirect costs to products at $81.50 per machine hour. Compute the total indirect costs allocated to the commercial containers and to the travel packs under the original system. Then compute the indirect cost per unit for each product. Round to two decimal places. Select the formula, and then enter the amounts to compute the indirect cost unit for each product. (Abbreviation used: mfg. = manufacturing. Round dollar amounts to two decimal places.) Actual overhead costs Number of units = Indirect cost per unit 2800 = Commercial containers 200000 - X Travel packs Data Table - X Requirement 2. Compute the predetermined overhead allocation rate for each activity. Begin by selecting the formula to calculate the predetermined overhead (OH) allocation rate. Then enter the amount Requirements Estimated Indirect Costs Allocation Base Estimated Quantity of Allocation Base PO Activity Materials handling Packaging $ 95.000 Number of kilos 19.000 kilos - 200,000 Number of machine hours 5.000 hours . 112,500 Number of samples Quality assurance 1,875 samples Materials handling Packaging Quality assurance - $ 407,500 Total indirect costs 1. Corbertt's original single plantwide overhead allocation rate costing system allocated indirect costs to products at $81.50 per machine hour. Compute the total indirect costs allocated to the commercial containers and to the travel packs under the original system. Then compute the indirect cost per unit for each product. Round to two decimal places. 2. Compute the predetermined overhead allocation rate for each activity 3. Use the predetermined overhead allocation rates to compute the activity-based costs per unit of the commercial containers and the travel packs. Round to two decimal places. (Hint: First compute the total activity-based costs allocated to each product line, and then compute the cost per unit) 4. Compare the indirect activity-based costs per unit to the indirect costs per unit from the traditional system. How have the unit costs changed? Explain why the costs changed. Requirement 3. Use the predetermined overhead allocation rates to compute the activity-based costs per unit of the Actual production information includes the following Commercial Containers Begin by selecting the formula to allocate overhead (OH) costs. Travel Packs 50,000 packs 5,000 = 2.800 containers 9,800 Allocated mfg. Compute the total activity-based costs allocated to commercial containers, and then compute the cost per unit for co Units produced Weight in kilos Machine hours Number of samples 2,240 500 Print Done Commercial containers Travel packs 560 750 Materials handling Packaging Print Done Quality assurance Choose from any list or enter any number in the input fields and then continue to the next